We have blogged several times before about the litigation misadventures of MSP Recovery, Inc., known for bringing Medicare recovery actions of questionable merit based on assignments of questionable validity that they obtain from various Medicare Advantage Plans looking for free money.  Occasionally, MSP has branched also filed RICO claims of an equally dubious nature.

In Series 17-03-615 v. Teva Pharmaceuticals USA, Inc., 2025 WL 1257677 (D. Kan. April 30, 2025), this would-be Medicare troll got trolled again, in yet another purported RICO class action.  Five defendants filed five motions to dismiss – and they were all granted.  Id. at *1.  On most issues, the five motions raised similar grounds:  lack of standing, lack of personal jurisdiction, and failure to state a claim.  Id. at *12. That led to the plaintiffs’ monumental procedural mistake.  Rather than bother to file separate responses to the five defendants’ motions, plaintiffs filed responsive papers that merely incorporated their responses to other defendants’ arguments by reference.  “[P]laintiffs filed responses to each of the five motions to dismiss” but “aggregated their responses to similar arguments which multiple defendants raised.”  Id.

That’s not allowed, and the “defendants objected to the format of plaintiffs’ response briefs because it required each defendant to respond to plaintiffs’ arguments in response to all five motions.”  Id.  The court agreed with the objection, but plaintiffs did nothing to correct the defect.  Bad move.  While the defendants’ motions weren’t spotless in this regard, incorporation by reference ran wild in the plaintiffs’ oppositions.  Id. at *13.

[P]laintiffs filed responses to each motion to dismiss, but each response incorporated all arguments in the other four responses.  Such incorporation by reference hindered the Court’s ability to review the merits of the substantive arguments and unfairly allowed plaintiffs to avoid page limitations. . . .  [T]he Court notified the parties that in deciding defendants’ motions to dismiss, it would disregard all incorporation by reference, by plaintiffs or by defendants.  In the ensuing nine days, no party asked to file an amended memorandum; all parties apparently made the strategic decision to have the Court decide the motions without reference to any incorporation by reference.

2025 WL 1257677, at *14 (citations omitted).  “Plaintiffs’ wholesale incorporation of arguments from four other responses [wa]s particularly troubling because some defendants raised arguments which did not apply to all defendants.”  Id. at *14 n.21.

Rather than fix their briefs, plaintiffs argued instead that the court was required to respect their incorporations by reference.  Id.  We don’t recall ever seeing a party make that kind of an argument before.  It’s not a good idea to challenge a court like that – fix your stupid briefs:

Plaintiffs argue that the Court cannot do so [treat improper incorporation by reference failure to contest]. The principle which plaintiffs cite applies when a party does not respond at all to a motion to dismiss or for summary judgment. . . .  Here, as noted, each of plaintiffs’ responses addressed some but not all arguments in each defendant’s motion.  In doing so, plaintiffs effectively conceded the arguments to which they did not respond.  Under District of Kansas Rule 7.1, if a party does not timely respond to a motion to dismiss, the Court ordinarily will grant the motion as uncontested without further notice.

Id. at *14-15 (citations omitted).  Nor could plaintiffs “belatedly” “file new opposition memoranda which do not incorporate any arguments by reference.”  Id. at *15.  They had their chance and refused.  Id.

• First, that would put defendants to the time and expense of filing new reply briefs.
• Second, plaintiffs sat around doing nothing for months
• Third, plaintiffs were solely to blame for their use of incorporation by reference as “an obvious attempt to evade the page limitation.”
• Fourth, “plaintiffs utterly fail to explain why” − after learning that the Court would disregard all incorporation − they did not immediately seek leave to file new responses.

Id. at *16-17.  In sum, because the “plaintiffs have engaged in a calculated strategy to defeat consideration on the merits” and “flout[ed] local rules on page limits,” the court would “not countenance counsel’s failure to seek leave earlier or otherwise attempt to work with opposing counsel about a schedule to file new responses after the Court notified the parties that it would not permit incorporation.”  Id. at *17 (citation omitted).

These procedural blunders, alone, cost plaintiffs most of their claims.  See Id. at *18-22.

They lost the rest on the merits.  As to one defendant, plaintiffs won on personal jurisdiction (RICO nationwide service of process), but since they had not addressed any of that defendants’ substantive RICO arguments, plaintiffs still lost.  Id. at *19-20.  As to a second defendant, plaintiffs won on standing, but – again because they did not brief any of that defendant’s substantive RICO arguments – they lost again.  Id. at *20-22.

Also on the merits, the other defendants’ substantive RICO arguments prevailed.  First, the certifications that Medicare reimbursement requires were not nearly as all-encompassing as plaintiffs alleged.  As long as the certification that the actual “claims data was accurate, complete and truthful” – “that’s it.”  Id. at *24.  Plaintiffs’ broader claim was meritless:

Contrary to what plaintiffs claim, however, federal regulations do not require insurance companies and pharmacies to more broadly certify that overall, “the submitted claim for payment is free and clear of any material defects that would otherwise prohibit payment.”  Plaintiffs cite no legal authority for this proposition and allege no facts which would justify the leap of logic which would be necessary to plausibly suggest that . . . data certified . . . cannot be “true, accurate and complete” unless it also certifies that the overall claim is pristine and untainted by any “material defects” that might prohibit payment.

Id.  Since MSP Recovery-created plaintiffs habitually make such claims, this holding is quite useful.

Further, plaintiffs had no evidence of causation.  The offered “no factual basis for this theory” and they did “not plausibly alleged that any insurance company paid any particular claim because of any ‘implied certification.’”  Id. at *24.  Having “search[ed] in vain for a revelation of the source of defendants’ alleged duty to certify that every [drug] claim submitted for payment was ‘untainted,’” the court concluded that these complaints were  merely hundreds of  pages of “loose pejorative invective.”  Id. at *25.

Ultimately, however, plaintiffs lack the factual allegations or the law to support such a theory of liability.  Putting lipstick on a pig cannot improve something which is fundamentally flawed, and compliance with court-ordered conditions of release cannot be established by changing your dog’s name to Probation Officer.

Id. (footnote omitted).

Plaintiffs’ allegations of “bribery” were equally fact-free.  Id. at *25-26.  “[T]he complaint does not plausibly allege generic bribery.  Plaintiffs do not allege that [any defendant] had a position of trust relative to doctors who prescribed [the drug] or insured patients who wanted to take it.”  Id. at *26.  Causation also failed, both as to allegations of increased price and as to more frequent claims.

Plaintiffs do not plausibly allege how copayment subsidies from . . . directly raised the price of [the drug] or increased the number of . . . claims.  Plaintiffs allege that because certain patients did not have to pay copays . . ., they had a reduced incentive to locate less expensive, equally effective drugs, but plaintiffs do not allege that less expensive, equally effective drugs were actually available, let alone suitable for particular patients or groups of patients.

Id. at *28.  Multiple “independent decision-makers influenced” both the “demand” for the drug and “its price.”  Id.  Nor could plaintiffs plausibly argue that patients shouldn’t have used the drug at all.  It treats a serious condition, multiple sclerosis, id. at *4, and is on the World Health Organization’s List of Essential Medicines.

Plaintiffs also lost on the RICO statute of limitations, which is a fact-based defense, and not particularly blogworthy.  Suffice it to say, that the facts demonstrated that the MSP Recovery plaintiffs belatedly sought to jump into  a situation (the opinion called it a “piggyback,” id. at *2 n.2) that had already been resolved.  The latest possible date for the four-year RICO limitations period to start running was August 13, 2024 – four years after the government publicly announced that it had settled its investigation of the same set of facts.  Id. at *31.  In another example of stellar lawyering, “[p]laintiffs filed their complaint on August 16, 2024 − three days after the four-year statute of limitations had expired.”  Id. at *32.

Finally, plaintiffs brought a variety of state-law claims under the laws of more than a dozen states (California, Connecticut, Florida, Illinois, Iowa, Maine, Massachusetts, Mississippi, Nebraska, New York, Ohio, Virginia, Washington and Wisconsin, if you have any specific interest)) – raising state RICO and consumer protection statutes, and unjust enrichment.  All these claims were also dismissed, mostly on statute of limitations grounds.  Id. at *34-38.

Thus, the would-be Medicare troll loses again – ending up like the Black Knight in Monty Python and the Holy Grail – with its own procedural missteps significantly to blame.

*          *          *          *

While researching this post we came across considerable Internet commentary to the effect that MSP Recovery is in perilous financial condition – including this story from last month that it faces NASDAQ delisting over an “equity deficit.”  We’re not financial analysts, so we don’t vouch for any of this.  However, since most if not all of the litigation that MSP Recovery brings is in the form of class actions, we would point out to interested defense counsel that a would-be class representative’s “resources” are directly relevant to the “adequacy” requirement of Fed. R. Civ. P. 23(a)(4).  See Fed. R. Civ. P. 23(g)(1)(iv).